Late last month, the Government announced a number of technical tax policy proposals, in line with its objective to create a simpler, fairer, and more modern tax system in the UK.
Of the proposals, there are a couple that will specifically impact the charity sector; precisely, the future of Gift Aid and of charities tax compliance.
‘Reforming’ Gift Aid
In the Government Summary, it stated that it would continue to engage with the charities sector to improve the way that Gift Aid works. Gift Aid is worth one billion a year to the sector and it is believed that hundreds of millions go unclaimed each year, in part due to the onerous systems in place.
The Charity Tax Group, in a recent news post, deem that this engagement will comprise of a review of the current processes, and research focusing on whether and how to digitise Gift Aid, making it fit for the future and ensuring it continues to deliver for charities.
This process will hopefully result in a simplified Gift Aid process which would be suitable for a wider range of charities, enabling them to take advantage of the scheme and so reduce the amount left unclaimed each year.
Tax compliance for charities
The Government has also published a consultation on ‘compliance measures’ impacting the charity sector, in a bid to ensure that tax relief rules are working as intended and that the integrity of the sector is not compromised.
The following areas will be reviewed, as part of the consultation:
- Preventing abuse of charitable investment rules
- Non-charitable expenditure rules and carry back provisions
- Tainted Charity Donation rules – i.e., to prevent a donor benefitting from a charitable donation
- Sanctions for non-compliance with filing and payment obligations
HMRC have been clear that any changes that result from this consultation should not detract from the generosity of the reliefs available to genuine charities; it is purely intended to tackle non-compliance.
The consultation was published on 27 April 2023 and will run to 20 July 2023.
A complete accountancy and advisory solution for charities
At George Hay, our team of charity accounting specialists support charities, CIOs, and unincorporated not-for-profit organisations to meet their statutory reporting obligations.
Beyond this, we take an advisory approach to working with the third sector; whether helping you to understand your role, or to appraise and strengthen governance overall – our practical advice is designed to help you operate compliantly, achieve financial stability and work towards your core objectives.
To discuss your charity’s accounting, audit, or advisory needs with one of our charity accounting professionals, contact us today.
